Determine what is the aftertax cost of debt

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Reference no: EM131959809

Jiminy's Cricket Farm issued a 30-year, 6.5 percent semiannual bond 7 years ago. The bond currently sells for 107 percent of its face value.

The book value of this debt issue is $105 million. In addition, the company has a second debt issue, a zero coupon bond with 10 years left to maturity; the book value of this issue is $75 million, and it sells for 62.5 percent of par. The company's tax rate is 35 percent.

What is the aftertax cost of debt?

Reference no: EM131959809

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